The European Commission is telling the world that its milk reduction scheme has worked, so why not get Brussels to make permanent provision for such a support platform for the dairy industry – courtesy of the upcoming CAP review?
We have the good news this week of Aurivo increasing its February milk price. But how long will this upward trend last for? At some stage in the future, milk prices will start to fall again. It could be on the back of dairy output really taking off in New Zealand and the US. Or, if the Chinese economy goes into free fall, what knock-on effects would this have on imports into that country.
The reality is that dairy volatility hasn’t gone away. When that cold north wind starts to blow in our direction, we do not want to be caught ‘metaphorically speaking’ with our trousers down and the old ‘shop and tackle’ succumbing to frostbite. So why not play Brussels at its game?
Fundamentally, the European dairy industry needs some form of insurance scheme. In my opinion, the EU Commission handed us one – that actually works – on a plate.
So much for the principle; the reality of what might come down the tracks could be a little bit more difficult to tease out. Brussels may well say yes, but then ask the question: Who’s going to pay for this?
Commissioner Phil Hogan has already said that the European Union does not have bottomless pockets. And it’s at this stage that all the farm lobby groups remind the gentleman in question of the value delivered by the CAP, in terms of providing cheap food for Europe. This is why it is so important to have a milk reduction scheme formally built into the CAP reform process.
And so what if farmers were expected to make a contribution to the pot? This could be done on the basis of producers receiving a full refund of the money they contributed, in the event of the scheme not being triggered within a 24-month period.
I know that certain lobby groups here in Ireland expressed opposition to the principle of the milk reduction scheme, claiming that it represented the re-introduction of quotas by the back door.
At one level this is absolute tosh; the initiative was voluntary in nature. But, here’s the other side of the story: How do the guys that got into dairying, on the back of quotas ending, feel now?
They have endured almost two years of poor-to-mediocre farm-gate returns, with whopping great loans hanging over their farm businesses. And all of this pain was caused by a combination of unrestricted milk output and falling consumer demand for dairy products.
